CS First Boston downgraded BearingPoint (BE) to underperform from neutral.
On Thursday the consulting company (formerly KPMG Consulting) posted a 20 cents first-quarter fiscal 2004 loss (including charges). Analyst Dris Upitis says the 5 cents first-quarter earnings per share (excluding charges) was in line with guidance and a penny per share above his estimate. He notes gross margins fell 112 basis points due in part to lower bill rates. Cash from operations fell below his estimate, owing to higher working capital.
Upitis says the $730 million to $760 million revenue guidance for the second quarter is flat -- despite normal seasonality and improved bookings momentum. While some macro factors appear to be improving, he says continued margin pressure and weak cash flows lead him to believe that BearingPoint still faces several internal challenges.